Private sector layoffs continued at a thoroughly uncomfortable pace in March. In fact, the March ADP National Employment Report was downright ugly.
Non-farm, private employment decreased by 742,000 in March -- worse than expected, ADP announced Wednesday in its report (pdf). In February and January, the private sector shed 706,000 and 522,000 jobs, respectively. Economists surveyed by Bloomberg News had expected private employers to cut 663,000 jobs in March.
Services, manufacturing see large losses
The two tell-tale stats in March were manufacturing and services. The manufacturing sector shed 206,000 jobs, its 37th straight monthly decline, while the services sector -- formerly a U.S. strength -- lost 415,000 jobs. The construction sector lost 118,000, its 26th consecutive monthly decline, and brought total construction jobs lost since the January 2005 peak to 1.135 million.
Zach Pandl, economist for Nomura Securities International, said commercial activity in the nearly 18-month recession is still contracting at too high a rate.
"The downturn in global growth and some other nagging headaches are going to create headwinds" for an economic recovery, Pandl told Bloomberg News Wednesday. "Even if you do see slightly slower contraction in some areas of manufacturing, the level of activity is still falling, and at a decent rate."
The job loss totals in March by business size (large-medium-small): 128,000 -- 330,000 -- 284,000.
ADP said the large employment decline among medium- and small-size businesses indicates that the recession continues to spread aggressively beyond manufacturing and housing-related activities to almost every area of the U.S. economy.
Meanwhile, U.S. Labor Secretary Hilda Solis told the Associated Press Tuesday it was "premature" to consider asking Congress for more money for unemployment benefits, adding that some of the administration's stimulus programs were still being distributed and several states must still make changes to implement the various programs. The Obama administration expects the $787 billion federal stimulus package to save or create about 3.5 million jobs nationally.
Economic Analysis: Investors should keep in mind that the more universal statistic, containing both private and public sector job data, is the U.S. Labor Department's monthly payroll statistic, and the March data will be released Friday, April 3 at 8:30 a.m. EDT. That report is expected to show a 650,000-job decline after a 651,000 loss in February, according to a Bloomberg News survey of economists.
That said, the fact that private payrolls have declined by more than 700,000 in each of the last two month indicates that the U.S. economy continues to lose jobs at an alarming rate. Further, it's all but impossible for corporate revenue and earnings to grow with job losses at these levels -- a factor that will continue to weigh on the U.S stock market.